The economic performance of ownerless firms

This paper explores whether ownership matters in a fundamental sense by comparing the performance of stockholder-owned firms to the much less analyzed ownerless firms, where no stakeholder has residual cash flow rights and control rights are shared by customers, employees, and the community. Controlling for differences in size and risk and only comparing firms within the same industry, we find that stockholder-owned firms do not outperform ownerless firms. This finding is consistent with the notion that owners can be replaced by other governance mechanisms. We find indicative evidence that by disciplining every firm regardless of its stakeholder structure, product market competition plays this role as a substitute for owner monitoring.